People tend to respond faster to a text message than email — a fact that is leading a growing number of advisors, including some large advisory firms, to use text messaging to reach out to clients.
According to Forrester, more than 6 billion text messages are sent each day in the United States, and a study by Hearsay Systems found 80% of financial services firms currently use or plan to use text messaging with customers and employees.
Still, texting can pose challenges due to industry recordkeeping and compliance requirements. For example, texting is considered by many to be an “opt-in” communication, requiring explicit approval from clients if they wish to receive texts from advisors. There are also limitations on content; for security reasons, it is generally not appropriate to send detailed account and transaction information by text.
An effective method
The appeal of texting, some advisors note, is the speedy response and the opportunity to make a personal connection with a client.
According to Hearsay, the open rate for text messages is 98%, and 90% of those messages are read within three minutes. Millennial and Generation X clients may be more likely to communicate via text.
Compliance remains a priority
The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission have specific rules for the use of email and text messaging. As with any electronic communication, recordkeeping and supervision are required. Saving copies of texts is more complex than capturing and archiving emails or even social media communication.
The increasing use of social media by advisors has driven several companies to develop services to monitor and archive electronic communications. Some monitor messages for content only, while other services also focus on security and require advisors to provide authentication, such as passwords, before sending a message.
Before starting to text, learn the rules and what is allowed at your firm. If you are allowed to compliantly text clients, ensure that the essential opt-in has been received from them to confirm that they are OK with this form of communication, and that you are using the device and application approved by your firm for texting.
Best practices for texting clients are similar to the best practices you use for texting in your personal life. Texting can be an efficient, quick, and timely way to cut through the clutter of other communication and connect with your clients on a personal level. Consider using texting to set up meetings (indicating date and time), invite clients to a social event (with address), or to acknowledge a personal milestone like anniversary or birthday (using emojis!).
Putnam Retail Management.